Grain Expectations

A marine surveyor conducted a joint survey acting for the seller of a cargo of grain at the load port. The buyer accepted the cargo then sold it on. At the discharge port, the ultimate buyer and consignee alleged the cargo was off-spec due to ambrosia seed and other impurities. The original buyer pointed to the original joint survey as being negligent due to not having run tests on specific parameters. The cargo had to be re-sold at a discount for a total loss of US$5/mt (approx. US$30,000). The original buyer attempted to recover their loss from the seller and subsequently the seller’s surveyor.

The matter was referred to ITIC. A thorough review confirmed that the surveyor had (a) acted strictly within the scope of their engagement by the seller and (b) owed no duty of care to the buyer who had their own surveyor at the joint survey. It appeared that the buyer’s own surveyor was operating under a separate and different set of instructions to the ones provided by the sellers.

Their claim against the seller’s surveyor was therefore misdirected, and there were no grounds for legal action.

It is important for surveyors to have clearly defined instructions and scope of engagement. Surveyors must ensure their responsibilities are documented and aligned with their principal’s expectations. Of course, it is arguable that a joint surveyor may owe a duty to the other party relying on the joint survey to perform their obligations with reasonable skill and care (but here, there was no obligation).

Therefore, where applicable, it is important to state what has and has not been tested especially where it is believed someone might think it would be tested. For example, if it is industry standard to always test for a specific impurity and the principal instructs the surveyor not to test for it, it would be prudent to state this in the survey report. This way it becomes much harder for the other party to rely on the fact that they reasonably believed the surveyor would have done a specific test if the report clearly says such a test has not been performed.